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Nestle weighs price increase to offset coffee cess

Published:Monday | May 14, 2018 | 12:00 AMAvia Collinder/Business Reporter
A Nescafe coffee distributed locally by Nestle Jamaica, is on display.

Nestle Jamaica Limited, which claims a 43 per cent share of the local retail coffee market as of February, says it's considering hiking the price of its products, following a 1,200 per cent increase in duties related to a new import cess.

The Swiss-owned company also denies that it imports coffee from Trinidad or any other Caricom country, to get around the cess, as charged by some of its Jamaican rivals.

Last week, local coffee producers said that the Government's new requirement for all blends to include at least 20 per cent of Jamaican coffee, combined with a new cess on green bean imports, was hurting local processors and giving foreign companies, which trade in finished products, an advantage in the market.

Asked for comment about the concerns, Starbucks International said it does not import green beans into Jamaica, only roasted coffee "which is already taxed". Importers of roasted coffee reportedly face duties of 20-40 per cent.

Nestle Jamaica also said it does not fall within the category of foreign companies described by coffee traders, saying through its communications unit that it pays the cess on all its coffee imports. The company also said on Monday that its costs have climbed since the implementation of the cess.

"We are still in the assessment stage as far as impact is concerned. However, quantitative impact shows a 1,200 per cent increase from US$0.18 to US$2.41 on green coffee bean content," the company stated.

As to what that means for the pricing of its products, Nestle said: "We are evaluating the increases needed to offset the increase in cess."